Greek railways cut off from Europe

Under pressure from the IMF, the Greek government is axing some if its railway services. Branch lines will close, including those to Olympia, Argos and Kalamata. All international trains to and from Greece, meaning those linking Greece to Bulgaria, Romania, Turkey, Macedonia and Serbia are being cancelled. Rail passengers will no longer be able to travel from Thessaloniki to Sofia, Belgrade, Bucharest or Istanbul.

From 11 February to 17 February, the two trains from Bucharest to Thessaloniki via Sofia will travel only to the Kulata cross-border point between Bulgaria and Greece. After 17 February, these trains will run only between Bucharest and Sofia. The afternoon international train, travelling from Thessaloniki to Sofia, was cancelled from 12 February. The two morning and the two afternoon international trains from and to Sofia to and from Thessaloniki were cancelled, beginning 13 February.

After more than 100 years the overland rail route to Greece has been cut, though international rail travellers will still be able to take a train to Italy and then take a ferry from Venice, Ancona or Bari on to Greece.

There are interesting parallels between what is happening in Greece today and the fate of Poland’s railways since the implementation of the so-called Balcerowicz Plan. The governments of both countries have underinvested in their railways with a consequent major decline in passenger and freight revenue. Both governments have preferred to see a gradual decline in railway services rather than to carry out a root and branch pruning of their heavily bloated and inefficient railway administrations. Both governments have focussed their infrastructure investment on improving their road networks and allowed their state railway companies to accumulate debts which were not regarded as part of the government borrowing. Both governments have had to cut their financing of their railways as part of major ad hoc fiscal adjustments being demanded by the IMF.

Those BTWT readers who have queried as to why the Polish government seems to be hell bent on following the British blueprint for the reform of its railways may wish to reflect that Britain adopted an IMF ‘rescue package’ in 1976 and Poland an IMF ‘shock therapy’ programme in 1989. Neighbouring former soviet economy countries such as the Czech and Slovak republics, and Hungary have been allowed to implement milder reform programmes without ‘back-seat’ driving by the IMF. Unlike Poland, these countries have met or even exceeded EU guidelines for new investment in railway infrastructure.

Below is a reading list which may or may not be relevant. The last three links relate to the IMF’s relations with the UK.

Reading list

OSE Financial statements for 2009 – Greek Railways accounts for 2009 prepared by Grant Thornton which show that the major portion of the railway deficit is due to finance costs (pdf download)